Published on People Move

Remittances go beyond snail mail - Card based technologies promise to revolutionize micro payments

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New card-based remittance technologies are now starting to be used for a variety of payments, including the delivery of public assistance to those in remote rural areas.

The use of prepaid/reloadable “smartcards” and “cash cards” promises to revolutionize the delivery of both private and public payments at the micro-level. Smartcards that use biometric technology for identification have been distributed by a card-provider FINO to nearly half-a-million people in rural areas in India receiving payments under the Indian government’s National Rural Employment Guarantee (NREG) scheme. Salaries of some Ghanaian government workers will be deposited directly into their e-zwich Smartcards which also uses a similar biometric technology, in a scheme piloted by the country’s central bank.

The Indonesian government is distributing cash payments through the national postal system to help poor families weather the shock of rising oil prices, according to an FT article. A previous attempt using this method reportedly reached more than 90 percent of the target audience. And in Malawi, schemes in the UN-supported Millennium Villages development project have distributed cash-cards to local people. Card-based remittance technologies can also be used for conditional cash transfers (CCTs) where families get assistance in return for socially beneficial behavior. 

The use of remittance channels for public aid delivery is not new. In Afghanistan, an informal money transfer system has been used in recent years by aid agencies to distribute cash to poor households in remote rural areas, according to this ODI report (see page 41). The card-based remittance technologies for micro payments will make their jobs far easier!  



Sanket Mohapatra

Associate Professor, IIM Ahmedabad

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